This invention relates to a method and system of controlling the value of financial transactions, more particularly on-line transactions involving a token, such as a credit card, debit card and cash card.
It is known that substantial amounts of money may be stolen from a card holder's bank account by an unauthorised party who obtained possession of the a card or details of a card. The risk may to some extent be covered by insurance, but the cost of the insurance has become so expensive that the use of token based payment instruments is limited to low risk customers. To alleviate the problem, relatively high daily, transaction and accumulative transaction limits are currently agreed upon by the cardholder and a financial institution. However, in spite of these limits, all the funds in a user's account and even other linked accounts may be stolen over a period of time and before the unauthorised transactions are discovered.
The applicant is aware of a method of pre-authorizing a single transaction, which is used, for example when an authorised user of a card, checks into a hotel, mainly as protection for the hotel to ensure that the user has sufficient funds available to pay for the service, rather than to control unauthorized use of the card. In this method, on checking in, the hotel determines whether there are sufficient funds available in an account associated with the card to pay for a single transaction, namely accommodation in the hotel and still unknown associated charges. If so, an estimated amount of funds is locked or reserved in the account for that one transaction and for the specified vendor or service provider. The transaction is then performed at an uncertain future time when the user checks out, utilizing at least the reserved funds.